One of the major issues that is presented in this excellent novel is that of caste and social stratification. Velutha is an "untouchable," a Dalit who occupies the lowest social stratum of Indian society. Velutha lives with his father,Vallya Paapen, and his crippled and paralysed brother, Kuttappen, in a little hut downriver from Rahel and Estha's house. Velutha is great friends with the children, although this is officially prohibited.

It was when Velutha was a child that Mammachi noticed Velutha's skill with his hands, and thus persuaded Velutha's father to send him to a special school for the untouchables. This education had the impact of making him not "safe" as an adult. As his father reflects, what Velutha has as an adult is a kind of self-assurance that "could be construed as insolence" in a touchable. He works in the pickle factory and has skill both with machines and with wood. He is also involved in the Communist party. It is clear that his position as untouchable does not sit easily with him

However, his real involvement comes when he becomes involved in an affair with Ammu, which transgresses the "love laws" that the novel repeatedly mentions. This leads him to being blamed for the rape and murder of Sophie Mol, even though he had nothing to do with it, and his cruel treatment at the hands of the police. It is this event, and Estha and Rahel's complicity with it, that haunts the two twins so strongly and creates the central tension of the novel as they try to come to terms with what happened and their role in it.